Bitcoin News Today: Crypto liquid funds lag 13.74% as Bitcoin jumps 28% amid flawed strategies, altcoin struggles

In a market where Bitcoin has surged nearly 28% year to date, crypto liquid funds remain underperformers, with some facing sharp losses and closures. Asymmetric’s Liquid Alpha Fund, which reportedly lost 78% of its value this year, has shuttered operations, marking one of the most severe setbacks in the sector. Founder Joe McCann attributed the closure to a strategy no longer aligned with investors’ needs, though he provided no direct explanation for the losses. Meanwhile, DeFiance Capital’s Arthur Cheong highlighted Asymmetric’s reliance on leveraged positions, memecoin trading, and options strategies as key factors in its struggles, noting that the fund recorded the worst first-half returns among liquid funds he tracks [1].

Galaxy Digital’s VisionTrack indices underscore the sector’s struggles: the Fundamental Index is down 13.74% year to date, while the Composite Index lags 6.36%. In contrast, Bitcoin’s gains have widened the performance gap, raising questions about the value of active liquid funds. Cosmo Jiang of Pantera Capital pointed to a structural mismatch, as most liquid funds avoid Bitcoin holdings due to investor constraints, leaving them exposed to underperforming altcoins. “Benchmarking against Bitcoin is akin to comparing an average equity fund to Nvidia,” Jiang observed, emphasizing the inherent disadvantage [1].

Market dynamics have further complicated returns. Rajiv Patel-O’Connor of Framework Ventures noted a shift from speculative flows to fundamentals-driven investing, catching some funds unprepared. Balder Bomans of Maven 11 Capital added that April’s altcoin crash—where tokens fell 50%-80% from December highs—exposed liquidity and timing challenges. Funds unable to adjust exposure faced missed rebounds in May and July, compounded by macro uncertainty and fragmented liquidity.

Asset selection and execution flaws also play a role. Ryan Watkins of Syncracy Capital highlighted missteps in buying cycles and shorting bottoms, while Lex Sokolin of Generative Ventures noted a disconnect between institutional inflows into Bitcoin and stagnant onchain activity. “Bidding on low-cap coins without market structure arbitrage is a tough proposition,” he said. Fewer than 10% of the top 300 tokens have outperformed Bitcoin this year, according to Cheong, making poor picks costly [1].

Despite the challenges, experts agree that quality and execution are paramount. Patel-O’Connor emphasized the need for tokens with revenue and usage, while Rob Hadick of Dragonfly noted a “flight to quality” trend. Strong fundamentals, coupled with disciplined sizing and liquidity management, are now critical. Bomans stressed that operational efficiency—quick reflexes and risk controls—matches the importance of investment insight [1].

Source: [1] [The Funding: Why crypto liquid funds are underperforming in a bullish market] [https://www.theblock.co/post/364334/why-crypto-liquid-funds-are-underperforming-in-a-bullish-market]